Alaska Senate committee advances tighter spending cap

At existing spending levels, proposal would require at least $100 million in budget cuts

Sen. Peter Micciche, R-Soldotna, presents Senate Bill 196 to the Senate State Affairs Committee on Tuesday, March 6, 2018. (Daniel McDonald | Alaska Senate Majority)

A proposal to more firmly cap the state budget is advancing in the Alaska Senate.

 

On Tuesday afternoon, boosted by public testimony firmly in support, the Senate State Affairs Committee approved Senate Bill 196. The measure advances to the Senate Finance Committee for further consideration.

If approved by the full Senate, the House, and Gov. Bill Walker, it would limit the state’s undesignated spending to $4.1 billion per year. The figure would be revised annually based on inflation and state population.

State spending is already limited by an amendment to the Alaska Constitution, but that limit has never been approached and many lawmakers, particularly in the 13-member Senate Majority, say a tighter limit is needed.

“We must control our spending in order to refill our savings accounts and sustain the programs Alaskans rely on in their everyday lives,” said Senate Majority Leader Peter Micciche, R-Soldotna, as he presented the bill to the committee. “Now is the time to pass an effective statutory appropriation limit.”

Micciche’s comments were backed by public testimony. Six callers, all from the Matanuska-Susitna Borough, said they want to see a smaller state government and less spending. (Others offered support by email.)

“We have a governor who is like, in the candy shop and 4 years old, eating as much candy as his parents will let him buy. I wish you would cut the governor’s budget and pass a 196 or a companion bill,” said Beth Fread of Palmer. “I just really believe we have gone way off track with our spending and our dipping into other people’s pockets for the money government should be able to handle.”

Jeremy Price, of Alaska’s chapter of Americans for Prosperity, testified in person.

“Boy, I hope we get these spending limitations in place and take care of (the state’s debt obligations),” he said.

After public testimony, the committee advanced the bill to the Senate Finance Committee, which drafted the measure and views it as a key component of a long-term solution to Alaska’s multibillion-dollar annual budget deficit.

Each year, Alaska’s budget is paid with money from three main sources: the federal government, fees and program earnings (such as ferry tickets and university tuition), and the state’s general fund. SB 196 limits that last category of spending but carves out exemptions for the Permanent Fund Dividend, state debt payments and the state’s construction and renovation budget.

Last year, the Legislature approved $5.1 billion in general fund spending, according to figures from the state Office of Management and Budget. According to figures provided by Senate Finance Committee staff, the exclusions within SB 196 mean only $3.93 billion of that amount would be subject to the cap.

Spending is expected to be higher this year, and Sen. Kevin Meyer, R-Anchorage, suggested the cap-targeted section of the budget could be as much as $4.6 billion.

“That’s what, almost a $500 million reduction from what the budget is now?” he asked Micciche.

“That’s correct, Mr. Chairman. I’m uncomfortable with the current level of UGF spend, excluding dividends, that we are currently at,” Micciche replied.

Senate Finance staff offered a competing figure, saying that the amount subject to the limit this year would be $3.96 billion. The different viewpoints could not be immediately reconciled.

While the cap is supported by members of the Senate’s majority and the two Republican senators who are not members of the majority, it is opposed by Democrats in the Senate’s five-member minority.

“I just don’t like it,” said Sen. Dennis Egan, D-Juneau and a member of the State Affairs Committee.

Asked why, he replied, “I just don’t like it.”

Other members of the minority said Wednesday that they are not opposed to a spending cap, but their support depends on the level of the cap.

“It’s one of those things you want to be real careful of, but I think it’s a good idea,” said Sen. Donny Olson, D-Golovin.

Sen. Bill Wielechowski, D-Anchorage, said the bill is “meaningless” unless passed by statute, because one legislature cannot bind a future legislature with a law. Making the spending cap effective would require a constitutional amendment, something that is advancing separately under the sponsorship of Meyer.

If the finance committee’s bill passes the Senate as expected, it may encounter resistance in the House, where the coalition House Majority has differing views from the Senate Majority.

“I believe it’ll be a cold day in hell before the House version of Senate Bill 196 will pass the House. Even less likely that this governor would sign off on such a bill,” said Wasilla resident Garvin Bucaria, who testified in support of the bill.

“I have no idea what the other body will do with this, but we’ve got to do what is right,” replied Meyer.


• Contact reporter James Brooks at jbrooks@juneauempire.com or call 523-2258.


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